Swatch Case
ENTREPRENEURSHIP AND INNOVATION
INSTRUCTOR: Jose Lejarraga
Case Report: Birth of the Swatch
Prepared By:
Sachin Agarwala
1. Why was Swatch successful? In what ways was Swatch different from any other watch the industry had ever seen?
A number of factors attributed to Swatch’s success and differentiated it from any other watch the industry had seen. There were factors on the manufacturing, branding and marketing, and designing side.
Manufacturing:
Hayek wanted complete vertical integration. He determined to build and assemble the low-priced quartz watch entirely in Switzerland. SMH had to bring down its production costs to Asian levels to remain competitive. SMH factories had to churn out Swatches on a fully automated production line.
The Swatch team decided that the watch would be encased in cheap plastic. This was a necessary decision for mass production. Hayek wanted Swatch to have a strong position in the low end of the market, to enable quality and cost controls in the other segments.
Branding and Marketing
Swatch positioned itself as a high quality; low cost, reliable watch company. It targeted the lower end of the watch segment.
Swatch would make use of Switzerland’s reputation as a premium watch making country, known for its high-quality watches. The name itself leverages brand equity from the name of the country.
The Swatch team decided that the Swatch would have a unique message, one unlike any other watch brand in the market. Hayek used the logic people wear watches for most of the day. He positioned the Swatch as an emotional product, which is an important part of your self-image. He did not want to treat a watch as a commodity. He wanted it to be a form of self-expression.
30% of a Swatch’s retail price was spent on advertising, more than double of any other company in the watch industry. Swatch made use of unorthodox promotional stunts-everything from break-dancing sponsorships to celebrity endorsements.
INSTRUCTOR: Jose Lejarraga
Case Report: Birth of the Swatch
Prepared By:
Sachin Agarwala
1. Why was Swatch successful? In what ways was Swatch different from any other watch the industry had ever seen?
A number of factors attributed to Swatch’s success and differentiated it from any other watch the industry had seen. There were factors on the manufacturing, branding and marketing, and designing side.
Manufacturing:
Hayek wanted complete vertical integration. He determined to build and assemble the low-priced quartz watch entirely in Switzerland. SMH had to bring down its production costs to Asian levels to remain competitive. SMH factories had to churn out Swatches on a fully automated production line.
The Swatch team decided that the watch would be encased in cheap plastic. This was a necessary decision for mass production. Hayek wanted Swatch to have a strong position in the low end of the market, to enable quality and cost controls in the other segments.
Branding and Marketing
Swatch positioned itself as a high quality; low cost, reliable watch company. It targeted the lower end of the watch segment.
Swatch would make use of Switzerland’s reputation as a premium watch making country, known for its high-quality watches. The name itself leverages brand equity from the name of the country.
The Swatch team decided that the Swatch would have a unique message, one unlike any other watch brand in the market. Hayek used the logic people wear watches for most of the day. He positioned the Swatch as an emotional product, which is an important part of your self-image. He did not want to treat a watch as a commodity. He wanted it to be a form of self-expression.
30% of a Swatch’s retail price was spent on advertising, more than double of any other company in the watch industry. Swatch made use of unorthodox promotional stunts-everything from break-dancing sponsorships to celebrity endorsements.